China is accelerating its efforts to clean up heavy industry, allocating money for the first time last year to help hard-to-decarbonize sectors increase the use of fuels such as green hydrogen. The push comes as the country continues building more solar panels, wind turbines, and nuclear reactors and expanding its grid faster than anywhere else in the world.
Those two trends are converging to spur the greening of aluminum in particular — a commodity that requires so much power to manufacture that it’s nicknamed “congealed electricity.”
Aluminum production hit a record high last year in China as demand for the alloy, which is used in virtually every kind of electrical application, soared in tandem with the country’s data center boom, according to numbers the National Bureau of Statistics released in January. Prices of the globally traded commodity have spiked by nearly 35% in the past year, meaning that aluminum produced with clean electricity, which comes with a green premium, is more competitive.
At the same time, Beijing’s latest policies to steer its world-leading aluminum smelters away from coal are just taking effect. While the most recent national statistics showed steel production at a seven-year low — a result of the shift away from housing construction — analysts say the surging demand for aluminum could speed up the pace of that industry’s transformation.
“I do expect green aluminum production to pick up, even as other commodities retrench,” said Xinyi Shen, the head of the China team at the Centre for Research on Energy and Clean Air, a Finnish nonprofit that tracks Chinese heavy industry. “In China, aluminum decarbonization is progressing … showing stronger policy momentum than steel at the moment.”
There are limits to how quickly the shift can take place. China has for the past decade maintained a cap on aluminum production to prevent smelters from oversupplying and destabilizing the power grid. New production to meet surging demand is quickly approaching that limit, according to a December analysis from the bank ING. But already, the industry is starting to reorient production toward decarbonization.
One way China’s aluminum industry is going green is through recycling. Producing secondary aluminum requires only about 5% of the energy needed to produce primary aluminum, meaning that carbon emissions are typically up to at least 80% lower. Between 2015 and 2024, China’s recycled aluminum output grew by about 6.25% per year, reaching nearly 11 million metric tons in 2024. In March 2025, Beijing set a target of more than 15 million tons of recycled aluminum by 2027.
“This pathway is already cost-competitive and relatively insulated from power-price volatility, so it’s likely to keep expanding even in a softer macro environment,” Shen said.
The other way is by transitioning existing smelters to using clean power. Since nearly 70% of primary aluminum production relies on coal-fired or natural-gas-fired power plants, the sector produces about 2% of global greenhouse gas emissions. The rest is largely powered from hydroelectric dams, next to which older smelters were traditionally sited.
The power-intensive smelting process involves blasting a molten bath of cryolite with an electrical current that separates out dissolved aluminum and yields a molten metal that can be cast into ingots, billets, or bars. In China, where most of the world’s aluminum is produced, the vast majority of that electricity has historically come from coal. Under its new regulations, Beijing wants most of the power that smelters consume to come from renewables.
Last year, aluminum became the first energy-intensive industrial sector subject to a new renewable power mandate requiring green electricity to supply 70% of smelters’ electrons, up from just over 25%.
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